Universities face fines for excessive vice-chancellor pay

Universities will have to justify vice-chancellor salaries and could be fined for paying excessive amounts, as part of proposals to cut higher education costs.

University minister Jo Johnson is urging universities to rein in the pay awarded to senior staff after it emerged that dozens of heads were earning more than £300,000 and some more than £400,000.

Under proposals from the Department for Education, institutions will have to justify all rates above £150,000 to the new regulator, the Office for Students.

This body could issue fines to establishments that fail to convince the watchdog that the high pay is warranted.

In addition, details of all staff earning more than £100,000 will be made public, which Johnson said would help foster a culture of "transparency and openness" in university pay.

Johnson set out the plans in a speech at the annual conference of umbrella body Universities UK in London yesterday.

He said: "Value for money is not just a function of the quality of education offered – it also requires universities to be good stewards of their resources."

“We need demonstrable action now to protect value for money for students and taxpayers in the future, to ensure that vice-chancellor pay levels are fair and justified, and that governance arrangements around remuneration are up to date."

He added: "The government has a legitimate interest in questions around institutional efficiency, both in our role as stewards of the higher education system and as its most significant single funder."

Tim Bradshaw, acting director of the Russell Group of universities, said that the Russell Group recognised the need to act responsibly around pay.

However, he pointed out: “At the same time, our members are operating in a fiercely competitive international market for the best research, teaching and leadership talent.

“Ultimately, this pays huge dividends, adding tens of billions of pounds to the economy every year and helping to maintain the UK's position as a world leader in science and innovation.”